Snowy Hydro 2.0 cost could blows out to $25 billion — more than 12 times original cost of $2 billion

The cost of the delay-plagued Snowy 2.0 pumped-hydro project could potentially blow out to $25 billion — or more than 12 times the original price tag promised just nine years ago.

The Federal Government-owned Snowy Hydro has confirmed an updated target cost to complete the project would conservatively cost $22.2b “with an allowance for a cost scenario of $25 billion”, following a cost reassessment from principal contractor Future Generation Joint Venture.

The higher estimate is more than 12 times the original $2 billion cost promise when then Liberal prime minister Malcolm Turnbull announced an expansion of the original Snowy Hydro in southern NSW, completed in 1974 after 25 years of post-war construction.

The cost has also doubled from $12 billion estimated in 2023.

The new target completion date has also been pushed out to late 2029 — eight years later than originally promised in 2017.

Snowy Hydro chief executive Dennis Barnes, who benefited from a $2 million remuneration package in the 2024-25 financial year to be one of Australia’s highest-paid government executives, said the cost could have been even higher if it weren’t for a move away from a fixed-price contract in 2023.

“I have no doubt that moving from a fixed price contract, which was never suitable for such scale, uniqueness and complexity, has protected the project from an even greater cost increase,” he said.

“It’s also likely that under a fixed price contract, the project would again be stopped under the weight of billions of dollars of claims from the contractor, as it was prior to the reset.”

Just three years ago, the Snowy Hydro 2.0 cost estimate was put at $12 billion, with first power in the second half of 2027 and a target date for commercial operation of all units by December 2028.

Mr Barnes said that by 2050, more than half of Australia’s total energy grid storage would come from Snowy 2.0, providing 350,000 megawatt hours of storage that was equivalent to 26 million home batteries.

“Like the original Snowy Scheme, which still underpins energy reliability more than 70 years on, Snowy 2.0 is a generational investment in our energy sovereignty and a national asset owned by all Australians,” he said.

The construction has been beset with engineering and commercial obstacles.

A 143-metre tunnel boring machine became stuck in hard rock in 2024 after previously being bogged in soft ground in Kosciuszko National Park in 2022.

Perth-based construction and engineering group Clough went into receivership in late 2022, just three years after costs blew out to $5 billion.

More to come...